Here’s my theory – we are in the midst of two separate, distinct yet interconnected real estate cycles.
The first cycle is comprised of those sellers who have purchased in the past five years who have either bought and sold a couple of times already or have purchased recently having watched their friends and neighbors buy, sell and hit the housing lottery. Call it skimming the froth, if you will. These are the short-timers.
The second cycle is the one that will show itself after this first cycle has run its course. This cycle is the one that will most accurately determine true market appreciation rates for the housing stock in the Charlottesville/Central Virginia market. This is probably true for the market from a macro-perspective, but this blog’s focus is local. These sellers may be comprised of those who purchased properties primarily as places to live, a reason to purchase that has seemingly been lost over the past five years.
These two cycles may well take three to seven years to flesh out. Why three to seven years? This is a somewhat arbitrary number. This timeframe is short enough to not be irrational and long enough where our culture’s relative new-found transience can play itself out.
My mother, who has been a Realtor for 20+ years, used to tell clients that if they were to purchase a home and sell it three to five years later and not lose money, then they had done very well for themselves. Quite a different perspective than that which we have witnessed over the past cycle, huh?
We are returning to a time when the housing market is less a liquid asset and more of a long-term asset with as much intrinsic, intangible value as financial. Short-time buyers and sellers will find their way out of the market as will the short-time Realtors. This qualifies, in my mind, as a “good thing.”
I could be wrong.